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An appeals court rescinded the four-year elimination for the Medicare appeals backlog until a trial court can determine if HHS claims that the timeline is impossible are valid.

August 17, 2017 - The DC appeals court recently revoked the court-ordered elimination timeline for the current $6.6 billion Medicare appeals backlog, arguing that the previous court was in error of the law by requiring HHS to do away with the backlog despite the Secretary’s claims that the timetable was impossible to achieve.

“We conclude that since the Secretary represented that lawful compliance with the mandamus order was impossible, it was an error of law, and therefore an abuse of discretion, to nonetheless order the Secretary to render that performance without first finding that lawful compliance was indeed possible,” the court’s two-to-one decision stated.

The recent decision will send the Medicare appeals backlog case from 2014 back to trial court. The American Hospital Association (AHA) and two other industry groups filed a lawsuit against HHS in 2014 to urge the federal department to meet regulatory deadlines for reviewing and deciding on Medicare appeals at the administrative law judge level.

As of June 2017, the Medicare appeals backlog reached 607,402 pending cases at the administrative law judge level.

Consequently, administrative law judges take an average of almost three years to process a Medical appeal, over 11 times longer than the statutory deadline of 90 days.

HHS Secretary Tom Price also recently told the court that the backlog of pending appeals is slated to grow to 950,520 cases by the end of the 2021 fiscal year.

To alleviate the substantial backlog, a federal judge ordered in December 2016 that HHS do away with the growing backlog according to the following timetable:

• 30 percent decrease by Dec. 31, 2017

• 60 percent reduction by Dec. 31, 2018

• 90 percent decline by Dec. 31, 2019

• No backlog of pending cases by Dec. 31, 2020

The American Hospital Association (AHA) viewed the court’s decision as a “victory for hospitals that continue to have billions of dollars in Medicare reimbursement tied up in a heavily backlogged appeals system.”

However, HHS responded to the court order by contending that the timetable was impossible to achieve according to Medicare statute. The timetable would require the federal department to make payment on Medicare claims regardless of the appeal’s merit, which violates Medicare regulations regarding claims reimbursement and appeal decisions.

HHS also argued that the timeline would be counterproductive and actually increase the Medicare appeals backlog. The mandated deadlines may incentivize claimants to file appeals regardless of claim merit because they might be part of a settlement.

The federal court countered that it was not asking HHS to perform specific actions to reduce the Medicare appeals backlog, rather it was mandating that the number of pending cases decrease each year.

But the most recent court decision argued that ignoring the HHS statement that the timetable was impossible to follow was inappropriate.

“By declining to evaluate the Secretary’s claims, the Court was, in effect, saying: ‘hit the targets by any means necessary,’” the decision stated. “But if the necessary means were unlawful, the Court could not have mandated them; equity courts, like any other, may not order parties to break the law.”

Therefore, the case should be retried in trial court to evaluate if HHS claims that eliminating the Medicare appeals backlog in four years is impossible. HHS must now bear the “heavy burden to demonstrate the existence of an impossibility,” the court wrote.

The trial court also must “scrutinize such claims carefully since officials may seize on a remedy made available for extreme illness and promote it into the daily bread of convenience.”

If the court determines that HHS failed to demonstrate impossibility, the Medicare appeals backlog elimination timeline could be reinstated without changes, the decision added.

In a dissenting opinion, one of three presiding judges stated that HHS has already violated Medicare regulation by neglecting to meet statutory deadlines for appeal decisions. Therefore, the elimination timeline was appropriate.

The judge also contended that forcing the case to endure under trial will “waste time, punishing blameless Medicare providers who await billions of dollars of delayed payments essential to their operations.”